Track your XEQT cost base before it costs you real money.
Every reinvested distribution raises your adjusted cost base, and almost nobody records it. Your broker generally will not do it for you, and the consequence is one-directional: an understated cost base means an overstated capital gain and tax you never owed. Enter your transactions below and this works out the average cost per unit, the running cost base, and the gain on any sale. Your entries stay in your own browser.
A buy or a sell needs units and a price. A DRIP needs units and a price too, since it really is a purchase. A reinvested distribution or a return of capital needs only the amount, because no units change hands.
| Date | Type | Units | Amount | Units held | ACB | ACB/unit | Gain | |
|---|---|---|---|---|---|---|---|---|
| No entries yet. Add your first purchase above, then work forward through your statements. | ||||||||
Entries are stored in this browser only. They are never sent anywhere, they are not visible to us, and they will not follow you to another device. Keep your own records too: this is a calculator, not a system of record.
The dividend calculator shows what XEQT pays and how much of it is reinvested rather than paid in cash. Capital gains tax on XEQT covers the rates.
Why this goes wrong, and always in the same direction
The errors are not random. Almost every one of them makes you pay more tax than you owe.
Your broker reports a book value, and it is frequently wrong for an ETF, because the broker does not see the fund's reinvested capital gains distributions. Those raise your cost base. Miss them and your cost base is too low, your gain is too high, and you hand the CRA money it never asked for. Nothing in the system corrects this for you, and the CRA will not object to being overpaid.
Put a number on it. Over the last twelve months XEQT distributed $1.04051 per unit of which $0.71836 was cash, so $0.32215 per unit was reinvested and needs adding to your cost base. On a 1,000 unit position, roughly $46,280 at today's price, that is about $322 a year and around $3,222 over a decade. Miss all of it and you declare a gain $3,222 larger than it was, which at a 25% capital gains rate is roughly $805 of tax you did not owe.
The four entry types, and why they differ
- Buy. Units go up. Cost base goes up by the purchase amount plus the commission, because the commission is part of what the property cost you.
- DRIP. A distribution is paid in cash and immediately used to buy units. Units go up, cost base goes up by the cash used. Mechanically a purchase, which is exactly how this tool treats it.
- Reinvested distribution. The fund keeps the money and you are taxed on it anyway. Cost base goes up, unit count does not change. This is the one everybody misses, and the reason it exists is to stop you being taxed twice.
- Return of capital. Money handed back that is not income. Not taxed on receipt, but the cost base falls, so the tax arrives later as a larger capital gain. If it drives the cost base below zero the excess is a capital gain immediately.
A sale is the fifth case and the only one that realises anything. Proceeds less the selling commission, less the units sold multiplied by the cost base per unit, is your capital gain.
The average cost rule
Canada requires the average cost method for identical properties. Every unit of XEQT you hold has the same cost base per unit, no matter when you bought it, and you cannot elect to sell your highest-cost units first.
This trips up anyone reading American material, where specific-lot identification is normal and choosing which shares to sell is a standard tax-planning move. In Canada it is not available. It also means a single partial sale is straightforward to compute, which is the one mercy of the rule.
One further wrinkle: identical property is identical across all your non-registered accounts. XEQT at two brokers is one pool for ACB purposes, so you cannot track them separately and expect the right answer.
Where the numbers come from on your T3
The slip you need arrives in the spring for the previous year, and the boxes that matter here are the ones people skip.
- Box 42, return of capital. Subtract this from your cost base. It is the only box on the slip that is explicitly an ACB adjustment.
- Reinvested capital gains. Add these. They are not always a numbered box, which is part of the problem; fund companies publish annual tax characteristic tables that separate cash from reinvested amounts, and the CDS Innovations tax breakdown files are the authoritative source.
- Boxes 21 and 30, capital gains. Reported as income for the year. Where reinvested, they also raise your cost base, which is the whole point.
The superficial loss trap
Sell at a loss and repurchase the identical property within 30 days either side of the sale, while still holding it at the end of that window, and the loss is denied. It is added to the cost base of the repurchased units instead, so you get it eventually, on a later sale.
Two ways this catches ordinary investors rather than aggressive ones:
- An automatic monthly purchase. Harvest a loss on the 10th, your standing order buys more on the 15th, and the loss is gone. This is the most common version and it is entirely accidental.
- Repurchasing inside a TFSA or RRSP. Here the loss is denied permanently rather than deferred, because there is no cost base in a registered account for it to attach to. This is the expensive version.
Affiliated persons include your spouse or common-law partner and a corporation you control, so a sale by one spouse and a purchase by the other inside the window is caught too.
What this does not do
- It does not apply the superficial loss rule automatically. It shows the raw gain or loss. Check the 30-day windows yourself.
- It tracks one holding. If you own XEQT at more than one broker, enter every account here as a single pool, which is what the rules require.
- It does not handle foreign currency. XEQT trades in Canadian dollars, so this is fine for XEQT and wrong for a US-listed holding, where each transaction must be converted at that day's rate.
- It is not a filing record. Keep your statements and T3s. This computes, it does not substantiate.
- It assumes a 50% inclusion rate, which is the law. The 2024 proposal to raise it to two thirds was never enacted.
Questions
It is the tax cost of your investment: what you paid, plus purchase commissions, plus any reinvested distributions, minus any return of capital. When you sell, your capital gain is the proceeds minus the ACB of the units sold. It matters only in a non-registered account. Inside a TFSA, RRSP or FHSA there is no ACB to track because there is no capital gain to report.
Because you were taxed on that money already. When a fund realises a capital gain it allocates it to you and, for the reinvested portion, keeps it inside the fund rather than paying it out. You pay tax on it in that year via your T3 even though no cash arrived. Increasing your ACB by the same amount is what stops you being taxed on it a second time when you eventually sell. Skip this step and you overstate your gain and overpay.
Yes, and differently from a reinvested distribution. A DRIP pays you cash and immediately buys more units with it, so your unit count rises and your ACB rises by the cash used. A reinvested capital gains distribution raises your ACB but your unit count does not change at all, which is why it is sometimes called a phantom distribution. This tracker has separate entry types for the two because confusing them is the most common error.
Averaged. For identical properties Canada requires the average cost method, so every unit of XEQT you own has the same ACB per unit regardless of when you bought it. There is no first-in-first-out option and no choosing which units you sell. This is different from the United States, which is why American guidance on the subject will mislead you.
A negative ACB is realised as a capital gain immediately in that year, and the ACB resets to zero. This is rare for XEQT, which distributes little return of capital, but it is common for high-payout funds and REITs held for many years.
If you sell at a loss and you or an affiliated person, which includes your spouse and a corporation you control, buy the identical property within 30 days before or after the sale and still hold it at the end of that window, the loss is denied and added to the ACB of the repurchased units instead. It catches people who sell for tax-loss harvesting and keep contributing through an automatic monthly purchase, and it catches a sale in a non-registered account followed by a repurchase inside a TFSA, where the loss is denied permanently.